Implications of an IFRS conversion on the US research & development tax credit

Implications of IFRS conversion on US tax accounting methods
Download Implications of an IFRS conversion on the US research & development tax credit.

It may appear that since the tax law associated with the US R&D tax credit is independent from book accounting policies, it will not be impacted by the conversion to IFRS. However, consider this: in many instances, a company's tax processes and systems used to claim the R&D tax credit do, in fact, leverage off of book R&D data (e.g., via project or cost center tracking).

As a result, the adoption of new book accounting policies with respect to R&D expenditures may impact the quantification of qualified research expenses (QREs) and create challenges in the qualification of R&D activities for US tax purposes. In addition, new accounting policies with respect to revenue recognition under IFRS may have a direct impact on the amount of a company's R&D tax credit.